daimler chrysler saidi isaac ron sparks candace stocker jeron wright

Daimler Chrysler Saidi Isaac

Ron Sparks

Candace Stocker

Jeron Wright

Daimler Chrysler’s Position

• Daimler Chrysler is committed to achieve consumer satisfaction among all global auto manufacturers because of our engineering excellence, innovative products, and superior service.

The External Environment

External Analysis

• Economic Factors• Social Factors• Political Factors• Technological Factors• Ecological Factors

Industry Analysis

Porter’s “Five Forces Model”

Competitor Profiles

Toyota

Competitor Profiles

GM Ford

Company Profile

Value-Chain Analysis

• Primary activities• Secondary activities• Strength and Weakness • Competitive advantage

Primary activities

•Inbound Logistics•Marketing and Sales •Service•marketing communications

Secondary Activities

•Human Resources Management •Technology Development •Firm Infrastructure

Strengths And Weakness

•Strong Brand names •Broaden it with models•Perfect fit and leaders •Negative view of Mercedes

Competitive Advantages

•Wide variety of vehicles •Mercedes’ strong characteristics

SWOT Analysis

Core Issue

• Automakers had been losing money. • After 9/11/2001 sales of cars and trucks

dropped dramatically – Mitsubishi’s sales were 20%– Chrysler’s sales were 5%– Mercedes’ sales were 2%

2003

Core Issue (cont.)

• How to differentiate themselves from global competition in a meaningful, sustainable manner.

• Growth of China automobile market• Developing innovative vehicles that appeal to

consumers• How to remain profitable in the future

SWOT Summary

• S: • W: • O: • T:

Financial Analysis

World Ranking

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GM FORD TOYOTA-DAIHATSU

VOLKSWAGEN DAIMLER-CHRYSLER

Auto Manufacturer

Uni

ts

2000 World Ranking

2001 World Ranking

2002 World Ranking

2003 World Ranking

Employment

• In 1998, the average annual number of employees totaled 433,939

• Peaked in 2000 at 463,561• By 2002, the average dropped to a mere

370,677• From 1998 to 2000, 92,884 people lost their

jobs• This equates to 25% of DaimlerChrysler

employee force

Net Income

• From 1998 to 2003 DaimlerChrysler only experienced a loss in net income within 2001

• In 2000 the company had nearly a gain of 7.89 billion

• In 2001 this amount totaled a whopping negative 662 million

• Causes and effects

Stock Prices

• Trends• Factors• Economic conditions

Market Conditions

• Terrorist attacks• Capital funding• Acquisitions within the industry

Ford

Profitability Ratio

2003 2002 2001

Profit Margin 0.00357 -0.007 -0.042

Turn Over 0.00156 -0.003 -0.062

Return on Investment (ROI) .000557% .00242% .26%

Return on Equity (ROE) .0151% .128% 2.95%

Toyota-Daihatsu

Profitability Ratio

2003 2002 2001

Profit Margin 0.0205 0.0278 0.0294

Turn Over 0.0133 0.0154 0.01211


Return on Equity (ROE) .0634% .0863% .070%

Daimler Chrysler

Profitability Ratio

2003 2002 2001

Profit Margin 0.0033 0.032 -0.0044

Turn Over 0.0025 0.0251 -0.0032



General Motors

Profitability Ratio

2003 2002 2001

Profit Margin 0.0208 0.0093 0.00339

Turn Over 0.0085 0.0047 0.0018



Profitability Ratio

Daimler Chrysler

Leverage Ratio

2003 2002 2001

Total Debt-Total Assets Ratio 0.539 0.5354 0.556

Long-term debt to Equity Ratio 2.12 2.275 2.241

General Motors

Leverage Ratio

2003 2002 2001



Ford

Leverage Ratio

2003 2002 2001



Toyota-Daihatsu

Leverage Ratio

2003 2002 2001



Leverage Ratio

Strategic Scenario

LONG TERM OBJECTIVE

• Number one automobile manufacturer in the world

BEST CASE SCENARIO

• Not to separate Operation Groups:• Mercedes units• Chrysler units • Mitsubishi units

WORST CASE SCENARIO

• Separation of the groups • Sale of Chrysler units• loosen a mega-merger• Money for Promotional

MOST LIKELY SCENARIO

• Separation of operations units• Mercedes unit from• Chrysler unit and• Mitsubishi unit

WHY

• Maintain Mercedes position• Profit for Innovation• Costly to maintain and sustain other• Have stronger brand image• Succeed and Survive in the competitive

markets

Corporate Level Strategies

Alternative I: Reorganization

• Expected Benefits• Winning Against the Competition• Drawbacks

Expected Benefits

• Units work cross-divisionally to maximize strengths

• Allows for the transfer of information, innovation, and expertise

• Cost-saving strategies• Feasibility

Winning Against the Competition

• Variety• Increased attractiveness • Stronger vehicle designs• Extra kickers

Drawbacks

• Negative view towards Mercedes• Decrease in sales for Mercedes• A way around these implications

Alternative II: Restructuring

• Expected Benefits• Pros• Cons

Expected Benefits

• Fixes Mercedes quality issue• Increases the Mercedes brand image• Helps DaimlerChrysler

Pros

• Power of Mercedes• Generated profits• A focus to improve

Cons

• Relying to much on Mercedes• Holding up both ends• Mercedes could still have quality issues• How to reduce these

Business Level Strategic Alternatives

SBUs

• Mercedes Car Group• Chrysler Group• Commercial Vehicles• Services (DaimlerChrysler Bank)• Other Activities (MTU Aero Engines,

Mitsubishi Motors, European Aeronautic Defense and Space Company (EADS)

Generic Strategies

• Differentiation• Low-Cost

Evaluation of Business Level Strategies

DifferentiationPros

– High level of customer loyalty– Charge premium for product– Possible increase in revenue– Reach wider target market

Cons– Companies imitate– Consumers view changes– Difficult to charge premiums

Evaluation of Business Level StrategiesLower Cost Leader

Pros

– Lower prices– Higher profit margin– Increase in revenue

Cons– Companies imitate– Technology changes– Bases for cost leadership

erode

Grand Strategies

• Product Development• Market Development• Innovation

Preferred Strategic Choice

• Long-term Objective• Corporate Level Strategy• Business Level Strategy

daimler chrysler saidi isaac ron sparks candace stocker jeron wright

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